Friday, December 20, 2013

Bitcoin—Troll's Gold

It's troll's gold—a curse to the holder, and to those who desire it. It's deflationary, which means it's an inherently poor currency to do business in; it comes with a built-in sales tax. It provides an incentive for employers and debtors to delay payment as long as possible. It's money that comes with a built-in discouragement to exchange, and half the work of money is as a medium of exchange.

And, yes, Bitcoin could become a problem. It was intended, after all to implement both the crypto-anarchist and goldbug agenda. But, really, isn't this what the biggest global banks have already done? Finance, beyond the control of the most powerful governments, and corrupting those governments. I do not think Bitcoin could make matters much worse, in that regard. Yet…

There's a dark side to Keynesian economics. Keynes-Hicks models provide tools which hold out the promise of an economy without booms and busts, without bubbles and depressions, without a 1%. Conversely, though, Keynesian management can be used to enable an aristocracy, to insure that money will only be a store of value for people who are connected with the people who run the system. A new tool of class oppression, in other words.

But there's a deeper darkness. Without the "somewhat comprehensive socialization of investment" that Keynesian economic management requires, a money economy is like a climate system, with arbitrary and unpredictable weather, vast storms, freezes, booms and busts. And that is what crypto-anarchists want to make a permanent condition.

Well. I do not think that is too likely. But a new aristocracy? Is that not what a faction of the world's very wealthy are working to create?